Scandia to establish EDA

Council votes unanimously for Economic Development Authority

The Scandia City Council May 21 voted unanimously to adopt a resolution enabling the establishment of an economic development authority (EDA) to promote economic growth and attract businesses.

According to the League of Minnesota Cities website, an EDA can subsidize businesses by offering tax-increment financing.

The EDA can also exercise powers under the housing and redevelopment authority law to create a redevelopment project, housing development or housing project. An EDA can request that the city appropriate part of the money the city collects in the general city levy to the EDA. This amount is subject to the city’s overall levy limit.

Using the levy powers of a housing redevelopment authority, it can also function as a special taxing district. This amount is not subject to levy limits or to city debt limits, but can be no more than 0.0185 percent of the total taxable market value in the city.

For certain purposes an EDA can lend money to a business, a nonprofit organization or individual. EDAs can acquire property and facilities, but cannot issue debt without an election.

The tax abatement financing tool authorizes the use of general obligation or revenue bonds for public improvements. The tax is not forgiven (abated), but as property owners pay the taxes, instead of being added to the local property taxes, the payments go directly to paying off the bonds.

The council discussed establishing an EDA at the Jan. 8 work session. City Administrator Kristina Handt called it another tool for economic development. At the March 12 work session, City Attorney Andrew Pratt presented a draft set of bylaws. He advised the council that this new unit of government will require liability insurance and can be used to levy taxes and use eminent domain. Handt recommended language be added so that eminent domain not be used without council approval.

At the required public hearing on May 21, only two residents spoke, Tom Triplett in favor and John Lindell in opposition.

Triplett said an EDA allows for county resources to be used for advancing housing and city development, and added that the City Council would have final authority on EDA actions.

Lindell thought an EDA makes sense for larger cities but is not what Scandia residents want, based on their comprehensive plan goal of preserving rural spaces.

Handt said an EDA could benefit non-profit agencies, tourism and the community market. All actions of the EDA must be consistent with the comprehensive plan of the city, she said.

Pratt said tax-increment financing is used in cases where, if help wasn’t given, a project would not get done and the land would be under-utilized. The EDA would have to show long-term benefit to use this tool.

The city is now seeking applications for three residents to serve, along with two council members, on the EDA board of commissioners. Initially, terms will be staggered to last three, four or five years. The normal term will be six years. Members must be residents or own real property in Scandia. Applications will be accepted until June 7.